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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Compass Minerals International Inc | NYSE:CMP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.05 | 0.39% | 12.76 | 13.365 | 12.41 | 13.10 | 715,854 | 01:00:00 |
|
Delaware
|
36-3972986
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
Large accelerated filer
þ
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
|
|
|
Emerging growth company
¨
|
|
|
|
Page
|
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|
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
|
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Item 2.
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Item 3.
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Item 4.
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PART II. OTHER INFORMATION
|
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Item 1.
|
||
|
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|
Item 1A.
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Item 2.
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||
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Item 3.
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||
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Item 4.
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||
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Item 5.
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||
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Item 6.
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||
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|
|
|
|
|
|
(Unaudited)
|
|
|
||||
|
June 30,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
33.9
|
|
|
$
|
77.4
|
|
Receivables, less allowance for doubtful accounts of $9.4
in 2017 and $9.0 in 2016
|
176.3
|
|
|
320.9
|
|
||
Inventories
|
287.9
|
|
|
280.6
|
|
||
Other
|
41.4
|
|
|
36.1
|
|
||
Total current assets
|
539.5
|
|
|
715.0
|
|
||
Property, plant and equipment, net
|
1,116.8
|
|
|
1,092.3
|
|
||
Intangible assets, net
|
149.8
|
|
|
157.6
|
|
||
Goodwill
|
403.2
|
|
|
412.2
|
|
||
Investment in equity investee
|
24.1
|
|
|
24.9
|
|
||
Other
|
64.5
|
|
|
64.5
|
|
||
Total assets
|
$
|
2,297.9
|
|
|
$
|
2,466.5
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Current portion of long-term debt
|
$
|
82.8
|
|
|
$
|
130.2
|
|
Accounts payable
|
80.7
|
|
|
100.8
|
|
||
Accrued expenses
|
61.3
|
|
|
105.3
|
|
||
Accrued salaries and wages
|
20.4
|
|
|
22.6
|
|
||
Income taxes payable
|
0.2
|
|
|
4.4
|
|
||
Accrued interest
|
8.6
|
|
|
8.7
|
|
||
Total current liabilities
|
254.0
|
|
|
372.0
|
|
||
Long-term debt, net of current portion
|
1,172.8
|
|
|
1,194.8
|
|
||
Deferred income taxes, net
|
130.4
|
|
|
130.8
|
|
||
Other noncurrent liabilities
|
47.0
|
|
|
51.8
|
|
||
Commitments and contingencies (Note 8)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock: $0.01 par value, 200,000,000 authorized shares; 35,367,264 issued shares
|
0.4
|
|
|
0.4
|
|
||
Additional paid-in capital
|
99.9
|
|
|
97.1
|
|
||
Treasury stock, at cost — 1,543,856 shares at June 30, 2017, and 1,577,960 shares at December 31, 2016
|
(2.9
|
)
|
|
(3.0
|
)
|
||
Retained earnings
|
693.7
|
|
|
727.5
|
|
||
Accumulated other comprehensive loss
|
(97.4
|
)
|
|
(104.9
|
)
|
||
Total stockholders’ equity
|
693.7
|
|
|
717.1
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,297.9
|
|
|
$
|
2,466.5
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Sales
|
$
|
228.0
|
|
|
$
|
169.5
|
|
|
$
|
615.8
|
|
|
$
|
515.2
|
|
Shipping and handling cost
|
40.6
|
|
|
37.1
|
|
|
134.3
|
|
|
126.5
|
|
||||
Product cost
|
142.5
|
|
|
91.1
|
|
|
355.0
|
|
|
244.8
|
|
||||
Gross profit
|
44.9
|
|
|
41.3
|
|
|
126.5
|
|
|
143.9
|
|
||||
Selling, general and administrative expenses
|
38.9
|
|
|
25.8
|
|
|
79.1
|
|
|
54.1
|
|
||||
Operating earnings
|
6.0
|
|
|
15.5
|
|
|
47.4
|
|
|
89.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other (income) expense:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
12.3
|
|
|
5.6
|
|
|
26.0
|
|
|
11.4
|
|
||||
Net (earnings) loss in equity investee
|
(0.2
|
)
|
|
1.7
|
|
|
(0.2
|
)
|
|
1.3
|
|
||||
Other, net
|
1.8
|
|
|
0.9
|
|
|
1.7
|
|
|
0.1
|
|
||||
(Loss) earnings before income taxes
|
(7.9
|
)
|
|
7.3
|
|
|
19.9
|
|
|
77.0
|
|
||||
Income tax (benefit) expense
|
(1.5
|
)
|
|
1.0
|
|
|
4.8
|
|
|
21.0
|
|
||||
Net (loss) earnings
|
$
|
(6.4
|
)
|
|
$
|
6.3
|
|
|
$
|
15.1
|
|
|
$
|
56.0
|
|
|
|
|
|
|
|
|
|
||||||||
Basic net (loss) earnings per common share
|
$
|
(0.19
|
)
|
|
$
|
0.18
|
|
|
$
|
0.44
|
|
|
$
|
1.65
|
|
Diluted net (loss) earnings per common share
|
$
|
(0.19
|
)
|
|
$
|
0.18
|
|
|
$
|
0.44
|
|
|
$
|
1.65
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic
|
33,823
|
|
|
33,784
|
|
|
33,813
|
|
|
33,766
|
|
||||
Diluted
|
33,823
|
|
|
33,787
|
|
|
33,813
|
|
|
33,769
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends per share
|
$
|
0.72
|
|
|
$
|
0.695
|
|
|
$
|
1.44
|
|
|
$
|
1.39
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) earnings
|
$
|
(6.4
|
)
|
|
$
|
6.3
|
|
|
$
|
15.1
|
|
|
$
|
56.0
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized gain from change in pension obligations, net of tax of $(0.0) in both the three and six months ended June 30, 2017, and 2016, respectively.
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.2
|
|
||||
Unrealized (loss) gain on cash flow hedges, net of tax of $0.2 and $0.5 in the three and six months ended June 30, 2017, respectively, and $(0.7) and $(0.8) in the three and six months ended June 30, 2016, respectively.
|
(0.4
|
)
|
|
1.2
|
|
|
(0.9
|
)
|
|
1.4
|
|
||||
Cumulative translation adjustment
|
(6.6
|
)
|
|
(3.3
|
)
|
|
8.2
|
|
|
31.1
|
|
||||
Comprehensive (loss) income
|
$
|
(13.3
|
)
|
|
$
|
4.3
|
|
|
$
|
22.6
|
|
|
$
|
88.7
|
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Treasury
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
||||||||||||
Balance, December 31, 2016
|
$
|
0.4
|
|
|
$
|
97.1
|
|
|
$
|
(3.0
|
)
|
|
$
|
727.5
|
|
|
$
|
(104.9
|
)
|
|
$
|
717.1
|
|
Comprehensive income
|
|
|
|
|
|
|
15.1
|
|
|
7.5
|
|
|
22.6
|
|
|||||||||
Dividends on common stock
|
|
|
0.1
|
|
|
|
|
(48.9
|
)
|
|
|
|
(48.8
|
)
|
|||||||||
Shares issued for stock units
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
|
|
|
|
—
|
|
|||||||||
Stock options exercised
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|||||||||
Stock-based compensation
|
|
|
2.5
|
|
|
|
|
|
|
|
|
2.5
|
|
||||||||||
Balance, June 30, 2017
|
$
|
0.4
|
|
|
$
|
99.9
|
|
|
$
|
(2.9
|
)
|
|
$
|
693.7
|
|
|
$
|
(97.4
|
)
|
|
$
|
693.7
|
|
|
Six Months Ended
June 30, |
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net earnings
|
$
|
15.1
|
|
|
$
|
56.0
|
|
Adjustments to reconcile net earnings to net cash flows provided by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
56.4
|
|
|
40.9
|
|
||
Finance fee amortization
|
1.1
|
|
|
0.6
|
|
||
Early extinguishment of debt
|
—
|
|
|
0.1
|
|
||
Stock-based compensation
|
2.5
|
|
|
2.6
|
|
||
Deferred income taxes
|
(0.6
|
)
|
|
(4.1
|
)
|
||
Net (earnings) loss in equity method investee
|
(0.2
|
)
|
|
1.3
|
|
||
Gain on settlement of acquisition-related contingent consideration
|
(1.9
|
)
|
|
—
|
|
||
Other, net
|
1.4
|
|
|
(0.6
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
145.1
|
|
|
78.2
|
|
||
Inventories
|
(6.9
|
)
|
|
35.8
|
|
||
Other assets
|
(3.7
|
)
|
|
(0.2
|
)
|
||
Accounts payable and accrued expenses
|
(64.2
|
)
|
|
(60.5
|
)
|
||
Other liabilities
|
(0.9
|
)
|
|
(0.2
|
)
|
||
Net cash provided by operating activities
|
143.2
|
|
|
149.9
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(55.6
|
)
|
|
(94.8
|
)
|
||
Investment in equity method investee
|
—
|
|
|
(4.7
|
)
|
||
Other, net
|
(2.7
|
)
|
|
(1.5
|
)
|
||
Net cash used in investing activities
|
(58.3
|
)
|
|
(101.0
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from revolving credit facility borrowings
|
100.3
|
|
|
183.5
|
|
||
Principal payments on revolving credit facility borrowings
|
(122.6
|
)
|
|
(80.5
|
)
|
||
Proceeds from issuance of long-term debt
|
11.6
|
|
|
400.0
|
|
||
Principal payments on long-term debt
|
(59.2
|
)
|
|
(473.4
|
)
|
||
Acquisition-related contingent consideration payment
|
(12.8
|
)
|
|
—
|
|
||
Dividends paid
|
(48.9
|
)
|
|
(47.1
|
)
|
||
Fees paid to refinance debt
|
—
|
|
|
(1.5
|
)
|
||
Deferred financing costs
|
(0.2
|
)
|
|
(3.5
|
)
|
||
Proceeds received from stock option exercises
|
0.3
|
|
|
0.7
|
|
||
Excess tax benefit (deficiency) from equity compensation awards
|
—
|
|
|
(0.2
|
)
|
||
Other, net
|
1.0
|
|
|
—
|
|
||
Net cash used in financing activities
|
(130.5
|
)
|
|
(22.0
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
2.1
|
|
|
7.4
|
|
||
Net change in cash and cash equivalents
|
(43.5
|
)
|
|
34.3
|
|
||
Cash and cash equivalents, beginning of the year
|
77.4
|
|
|
58.4
|
|
||
Cash and cash equivalents, end of period
|
$
|
33.9
|
|
|
$
|
92.7
|
|
Supplemental cash flow information:
|
|
|
|
|
|
||
Interest paid, net of amounts capitalized
|
$
|
20.2
|
|
|
$
|
10.7
|
|
Income taxes paid, net of refunds
|
$
|
16.6
|
|
|
$
|
44.8
|
|
1.
|
Accounting Policies and Basis of Presentation:
|
2.
|
Acquisition:
|
Fair Value of Consideration Transferred (in millions)
|
October 3, 2016
|
|
|
Cash paid at closing
|
$
|
317.1
|
|
Additional cash due at closing
|
20.6
|
|
|
Fair value of contingent consideration
|
31.4
|
|
|
Fair value of 35% equity investment
|
178.7
|
|
|
Total
|
$
|
547.8
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed:
|
Purchase Price Allocation
|
||
Cash and cash equivalents
|
$
|
73.8
|
|
Accounts receivable
|
89.4
|
|
|
Inventory
|
77.1
|
|
|
Other current assets
|
13.7
|
|
|
Property, plant and equipment
|
189.4
|
|
|
Identified intangible assets
|
81.2
|
|
|
Investment in equity method investee
|
24.5
|
|
|
Other noncurrent assets
|
6.9
|
|
|
Accounts payable
|
(27.1
|
)
|
|
Accrued expenses
|
(40.3
|
)
|
|
Current portion of long-term debt
|
(129.6
|
)
|
|
Other current liabilities
|
(14.0
|
)
|
|
Long-term debt, net of current portion
|
(62.0
|
)
|
|
Deferred income taxes, net
|
(66.0
|
)
|
|
Other noncurrent liabilities
|
(21.9
|
)
|
|
Total identifiable net assets
|
195.1
|
|
|
Goodwill
|
352.7
|
|
|
Total fair value of business combination
|
$
|
547.8
|
|
|
Estimated Fair Value
(in millions)
|
Weighted-Average Amortization Period
(in years)
|
||
Trade names
|
$
|
36.9
|
|
11.0
|
Developed technology
|
37.5
|
|
5.3
|
|
Customer relationships
|
6.8
|
|
13.5
|
|
Total identifiable intangible assets
|
$
|
81.2
|
|
8.6
|
Unaudited Combined Pro Forma Results of Operations (in millions)
|
Three Months Ended
June 30, 2016 |
Six Months Ended
June 30, 2016 |
||||
Revenues
|
$
|
241.3
|
|
$
|
648.3
|
|
Net income
|
6.2
|
|
50.2
|
|
•
|
Adjustments to exclude non-recurring direct incremental costs of the acquisition
|
•
|
Adjustments to expenses relating to the financing transactions described above
|
•
|
Adjustments to reflect incremental amortization and depreciation from the preliminary allocation of the purchase price
|
•
|
Adjustments to reflect certain income tax effects of the acquisition
|
•
|
Adjustments to remove net earnings related to the previously held
35%
equity interest in Produquímica
|
3.
|
Inventories:
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Finished goods
|
$
|
208.1
|
|
|
$
|
206.1
|
|
Raw materials and supplies
|
79.8
|
|
|
74.5
|
|
||
Total inventories
|
$
|
287.9
|
|
|
$
|
280.6
|
|
4.
|
Property, Plant and Equipment, Net:
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Land, buildings and structures, and leasehold improvements
|
$
|
490.8
|
|
|
$
|
480.1
|
|
Machinery and equipment
|
879.3
|
|
|
848.2
|
|
||
Office furniture and equipment
|
29.3
|
|
|
28.3
|
|
||
Mineral interests
|
170.7
|
|
|
168.5
|
|
||
Construction in progress
|
281.2
|
|
|
243.6
|
|
||
|
1,851.3
|
|
|
1,768.7
|
|
||
Less accumulated depreciation and depletion
|
(734.5
|
)
|
|
(676.4
|
)
|
||
Property, plant and equipment, net
|
$
|
1,116.8
|
|
|
$
|
1,092.3
|
|
5.
|
Goodwill and Intangible Assets, Net:
|
6.
|
Income Taxes:
|
7.
|
Long-term Debt:
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Term Loans due July 2021
|
$
|
841.6
|
|
|
$
|
845.9
|
|
Revolving Credit Facility due July 2021
|
83.1
|
|
|
105.4
|
|
||
4.875% Senior Notes due July 2024
|
250.0
|
|
|
250.0
|
|
||
Banco Bradesco Loan due February 2017
|
—
|
|
|
13.2
|
|
||
Banco Votorantim Loan due April 2017
|
—
|
|
|
12.4
|
|
||
Banco Bradesco Loan due July 2017
|
—
|
|
|
4.8
|
|
||
Scotiabank Loan due August 2017
|
—
|
|
|
20.2
|
|
||
Banco Itaú Loans due September 2017
|
15.8
|
|
|
15.1
|
|
||
Scotiabank Loan due September 2017
|
15.0
|
|
|
15.1
|
|
||
Banco Votorantim Loan due September 2017
|
—
|
|
|
0.8
|
|
||
Banco Bradesco Loan due October 2017
|
17.0
|
|
|
16.8
|
|
||
Rabobank Loan due November 2017
|
22.3
|
|
|
22.6
|
|
||
Banco Itaú Loans due May 2019 to April 2020
|
2.4
|
|
|
3.1
|
|
||
Banco do Brasil Loan due November 2017
|
0.5
|
|
|
—
|
|
||
Financiadora de Estudos e Projetos Loan due November 2023
|
13.5
|
|
|
7.4
|
|
||
Banco do Brasil Loan due September 2017
|
0.1
|
|
|
—
|
|
||
Banco do Brasil Loan due October 2017
|
0.3
|
|
|
—
|
|
||
Banco Safra Loan due September 2017
|
0.8
|
|
|
—
|
|
||
Banco do Brasil Loan due February 2018
|
0.2
|
|
|
—
|
|
||
|
1,262.6
|
|
|
1,332.8
|
|
||
Less unamortized debt issuance costs
|
(7.0
|
)
|
|
(7.8
|
)
|
||
Total Debt
|
1,255.6
|
|
|
1,325.0
|
|
||
Less current portion
|
(82.8
|
)
|
|
(130.2
|
)
|
||
Long-term debt
|
$
|
1,172.8
|
|
|
$
|
1,194.8
|
|
8.
|
Commitments and Contingencies:
|
9.
|
Operating Segments:
|
Three Months Ended June 30, 2017
|
|
Salt
|
|
Plant
Nutrition North America
|
|
Plant
Nutrition South America |
|
Corporate
& Other
(a)
|
|
Total
|
||||||||||
Sales to external customers
|
|
$
|
109.0
|
|
|
$
|
50.5
|
|
|
$
|
66.1
|
|
|
$
|
2.4
|
|
|
$
|
228.0
|
|
Intersegment sales
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
(2.0
|
)
|
|
—
|
|
|||||
Shipping and handling cost
|
|
29.7
|
|
|
6.9
|
|
|
4.0
|
|
|
—
|
|
|
40.6
|
|
|||||
Operating earnings (loss)
|
|
10.7
|
|
|
7.6
|
|
|
0.8
|
|
|
(13.1
|
)
|
|
6.0
|
|
|||||
Depreciation, depletion and amortization
|
|
12.7
|
|
|
8.6
|
|
|
5.4
|
|
|
1.3
|
|
|
28.0
|
|
|||||
Total assets (as of end of period)
|
|
868.0
|
|
|
582.9
|
|
|
790.0
|
|
|
57.0
|
|
|
2,297.9
|
|
Three Months Ended June 30, 2016
|
|
Salt
|
|
Plant
Nutrition North America
(b)
|
|
Plant
Nutrition South America |
|
Corporate
& Other
(a)
|
|
Total
|
||||||||||
Sales to external customers
|
|
$
|
119.1
|
|
|
$
|
47.8
|
|
|
$
|
—
|
|
|
$
|
2.6
|
|
|
$
|
169.5
|
|
Intersegment sales
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|||||
Shipping and handling cost
|
|
31.4
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
37.1
|
|
|||||
Operating earnings (loss)
|
|
23.3
|
|
|
4.7
|
|
|
—
|
|
|
(12.5
|
)
|
|
15.5
|
|
|||||
Depreciation, depletion and amortization
|
|
11.3
|
|
|
8.4
|
|
|
—
|
|
|
1.3
|
|
|
21.0
|
|
|||||
Total assets (as of end of period)
|
|
899.1
|
|
|
702.7
|
|
|
—
|
|
|
54.8
|
|
|
1,656.6
|
|
Six Months Ended June 30, 2017
|
|
Salt
|
|
Plant
Nutrition North America
|
|
Plant
Nutrition South America |
|
Corporate
& Other
(a)
|
|
Total
|
||||||||||
Sales to external customers
|
|
$
|
383.8
|
|
|
$
|
99.7
|
|
|
$
|
127.4
|
|
|
$
|
4.9
|
|
|
$
|
615.8
|
|
Intersegment sales
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|||||
Shipping and handling cost
|
|
112.7
|
|
|
13.6
|
|
|
8.0
|
|
|
—
|
|
|
134.3
|
|
|||||
Operating earnings (loss)
|
|
56.1
|
|
|
15.2
|
|
|
2.6
|
|
|
(26.5
|
)
|
|
47.4
|
|
|||||
Depreciation, depletion and amortization
|
|
25.6
|
|
|
17.5
|
|
|
10.7
|
|
|
2.6
|
|
|
56.4
|
|
Six Months Ended June 30, 2016
|
|
Salt
|
|
Plant
Nutrition North America
|
|
Plant
Nutrition South America |
|
Corporate
& Other
(a)
|
|
Total
|
||||||||||
Sales to external customers
|
|
$
|
411.2
|
|
|
$
|
98.9
|
|
|
$
|
—
|
|
|
$
|
5.1
|
|
|
$
|
515.2
|
|
Intersegment sales
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|||||
Shipping and handling cost
|
|
114.4
|
|
|
12.1
|
|
|
—
|
|
|
—
|
|
|
126.5
|
|
|||||
Operating earnings (loss)
|
|
106.0
|
|
|
10.0
|
|
|
—
|
|
|
(26.2
|
)
|
|
89.8
|
|
|||||
Depreciation, depletion and amortization
|
|
22.0
|
|
|
16.3
|
|
|
—
|
|
|
2.6
|
|
|
40.9
|
|
(a)
|
Corporate and other includes corporate entities, records management operations and other incidental operations and eliminations. Operating earnings (loss) for corporate and other includes indirect corporate overhead, including costs for general corporate governance and oversight, as well as costs for the human resources, information technology, legal and finance functions.
|
(b)
|
In 2016, total assets for Plant Nutrition North America include the equity investment in Produquímica.
|
10.
|
Stockholders’ Equity and Equity Instruments:
|
|
|
Stock Options
|
|
RSUs
|
|
PSUs
(a)
|
|||||||||||||||
|
|
Number
|
|
Weighted-average
exercise price
|
|
Number
|
|
Weighted-average
fair value
|
|
Number
|
|
Weighted-average
fair value
|
|||||||||
Outstanding at December 31, 2016
|
|
442,755
|
|
|
$
|
80.07
|
|
|
63,780
|
|
|
$
|
80.25
|
|
|
89,011
|
|
|
$
|
89.43
|
|
Granted
|
|
227,351
|
|
|
68.00
|
|
|
34,635
|
|
|
68.00
|
|
|
58,878
|
|
|
73.08
|
|
|||
Exercised
(b)
|
|
(3,366
|
)
|
|
76.03
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Released from restriction
(b)
|
|
—
|
|
|
—
|
|
|
(13,018
|
)
|
|
87.18
|
|
|
(12,946
|
)
|
|
105.77
|
|
|||
Cancelled/expired
|
|
(53,664
|
)
|
|
74.98
|
|
|
(8,129
|
)
|
|
70.57
|
|
|
(16,069
|
)
|
|
89.59
|
|
|||
Outstanding at June 30, 2017
|
|
613,076
|
|
|
$
|
76.06
|
|
|
77,268
|
|
|
$
|
74.61
|
|
|
118,874
|
|
|
$
|
79.53
|
|
(a)
|
Until they vest, PSUs are included in the table at the target level at their grant date and at that level represent
one
share of common stock per PSU. The final performance period for the 2014 PSU grant was completed in 2016. The Company cancelled
6,900
PSUs in 2017 related to the 2014 PSU grant.
|
(b)
|
Common stock issued for exercised options and for vested and earned RSUs and PSUs was issued from treasury stock.
|
Three Months Ended June 30, 2017
(a)
|
Gains and
(Losses) on
Cash Flow
Hedges
|
|
Defined
Benefit
Pension
|
|
Foreign
Currency
|
|
Total
|
||||||||
Beginning balance
|
$
|
0.1
|
|
|
$
|
(3.6
|
)
|
|
$
|
(87.0
|
)
|
|
$
|
(90.5
|
)
|
Other comprehensive income (loss) before reclassifications
(b)
|
(0.4
|
)
|
|
—
|
|
|
(6.6
|
)
|
|
(7.0
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Net current period other comprehensive income (loss)
|
(0.4
|
)
|
|
0.1
|
|
|
(6.6
|
)
|
|
(6.9
|
)
|
||||
Ending balance
|
$
|
(0.3
|
)
|
|
$
|
(3.5
|
)
|
|
$
|
(93.6
|
)
|
|
$
|
(97.4
|
)
|
Three Months Ended June 30, 2016
(a)
|
Gains and
(Losses) on
Cash Flow
Hedges
|
|
Defined
Benefit
Pension
|
|
Foreign
Currency
|
|
Total
|
||||||||
Beginning balance
|
$
|
(1.4
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
(68.5
|
)
|
|
$
|
(73.6
|
)
|
Other comprehensive income (loss) before reclassifications
(b)
|
0.7
|
|
|
—
|
|
|
(3.3
|
)
|
|
(2.6
|
)
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
0.5
|
|
|
0.1
|
|
|
—
|
|
|
0.6
|
|
||||
Net current period other comprehensive income (loss)
|
1.2
|
|
|
0.1
|
|
|
(3.3
|
)
|
|
(2.0
|
)
|
||||
Ending balance
|
$
|
(0.2
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
(71.8
|
)
|
|
$
|
(75.6
|
)
|
Six Months Ended June 30, 2017
(a)
|
Gains and
(Losses) on
Cash Flow
Hedges
|
|
Defined
Benefit
Pension
|
|
Foreign
Currency
|
|
Total
|
||||||||
Beginning balance
|
$
|
0.6
|
|
|
$
|
(3.7
|
)
|
|
$
|
(101.8
|
)
|
|
$
|
(104.9
|
)
|
Other comprehensive income (loss) before reclassifications
(b)
|
(0.9
|
)
|
|
—
|
|
|
8.2
|
|
|
7.3
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
||||
Net current period other comprehensive income (loss)
|
(0.9
|
)
|
|
0.2
|
|
|
8.2
|
|
|
7.5
|
|
||||
Ending balance
|
$
|
(0.3
|
)
|
|
$
|
(3.5
|
)
|
|
$
|
(93.6
|
)
|
|
$
|
(97.4
|
)
|
Six Months Ended June 30, 2016
(a)
|
Gains and
(Losses) on
Cash Flow
Hedges
|
|
Defined
Benefit
Pension
|
|
Foreign
Currency
|
|
Total
|
||||||||
Beginning balance
|
$
|
(1.6
|
)
|
|
$
|
(3.8
|
)
|
|
$
|
(102.9
|
)
|
|
$
|
(108.3
|
)
|
Other comprehensive income (loss) before reclassifications
(b)
|
0.2
|
|
|
—
|
|
|
31.1
|
|
|
31.3
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
1.2
|
|
|
0.2
|
|
|
—
|
|
|
1.4
|
|
||||
Net current period other comprehensive income (loss)
|
1.4
|
|
|
0.2
|
|
|
31.1
|
|
|
32.7
|
|
||||
Ending balance
|
$
|
(0.2
|
)
|
|
$
|
(3.6
|
)
|
|
$
|
(71.8
|
)
|
|
$
|
(75.6
|
)
|
(a)
|
With the exception of the cumulative foreign currency translation adjustment, for which no tax effect is recorded, the changes in the components of accumulated other comprehensive gain (loss) presented in the tables above are reflected net of applicable income taxes.
|
(b)
|
The Company recorded foreign exchange losses (gains) of
$8.6 million
and
$1.4 million
in the
three and six
months ended
June 30, 2017
, respectively, and
$(4.9) million
and
$(26.7) million
in the
three and six
months ended
June 30, 2016
, respectively, in accumulated other comprehensive loss related to intercompany notes which were deemed to be of long-term investment nature.
|
|
Amount Reclassified from AOCI
|
|
|
||||||
|
Three Months Ended
June 30, 2017 |
|
Six Months Ended
June 30, 2017 |
|
Line Item Impacted in the
Consolidated Statement of Operations
|
||||
Gains and (losses) on cash flow hedges:
|
|
|
|
|
|
||||
Natural gas instruments
|
$
|
—
|
|
|
$
|
—
|
|
|
Product cost
|
|
—
|
|
|
—
|
|
|
Income tax expense (benefit)
|
||
Reclassifications, net of income taxes
|
—
|
|
|
—
|
|
|
|
||
Amortization of defined benefit pension:
|
|
|
|
|
|
|
|||
Amortization of loss
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
Product cost
|
|
—
|
|
|
—
|
|
|
Income tax expense (benefit)
|
||
Reclassifications, net of income taxes
|
0.1
|
|
|
0.2
|
|
|
|
||
Total reclassifications, net of income taxes
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
|
|
Amount Reclassified from AOCI
|
|
|
||||||
|
Three Months Ended
June 30, 2016 |
|
Six Months Ended
June 30, 2016 |
|
Line Item Impacted in the
Consolidated Statement of Operations
|
||||
Gains and (losses) on cash flow hedges:
|
|
|
|
|
|
||||
Natural gas instruments
|
$
|
0.8
|
|
|
$
|
1.9
|
|
|
Product cost
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|
Income tax expense (benefit)
|
||
Reclassifications, net of income taxes
|
0.5
|
|
|
1.2
|
|
|
|
||
Amortization of defined benefit pension:
|
|
|
|
|
|
|
|||
Amortization of loss
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
Product cost
|
|
—
|
|
|
—
|
|
|
Income tax expense (benefit)
|
||
Reclassifications, net of income taxes
|
0.1
|
|
|
0.2
|
|
|
|
||
Total reclassifications, net of income taxes
|
$
|
0.6
|
|
|
$
|
1.4
|
|
|
|
11.
|
Derivative Financial Instruments:
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivatives designated as hedging instruments:
|
|
Balance Sheet Location
|
|
June 30, 2017
|
|
Balance Sheet Location
|
|
June 30, 2017
|
||||
Commodity contracts
|
|
Other current assets
|
|
$
|
0.1
|
|
|
Accrued expenses
|
|
$
|
0.5
|
|
Commodity contracts
|
|
Other assets
|
|
—
|
|
|
Other noncurrent liabilities
|
|
0.1
|
|
||
Total derivatives designated as hedging instruments
(a)
|
|
|
|
0.1
|
|
|
|
|
0.6
|
|
||
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||
Swap contracts
|
|
Other current assets
|
|
$
|
—
|
|
|
Accrued expenses
|
|
$
|
13.8
|
|
Swap contracts
|
|
Other assets
|
|
—
|
|
|
Other noncurrent liabilities
|
|
—
|
|
||
Total derivatives not designated as hedging instruments
|
|
|
|
—
|
|
|
|
|
13.8
|
|
||
Total Derivatives
(b)
|
|
|
|
$
|
0.1
|
|
|
|
|
$
|
14.4
|
|
(a)
|
The Company has master netting agreements with its commodity hedge counterparties and accordingly has netted in its consolidated balance sheets approximately
$0.1 million
of its commodity contracts that are in receivable positions against its contracts in payable positions.
|
(b)
|
The Company has commodity hedge and foreign currency swap agreements with
two
and
five
counterparties, respectively. Amounts recorded as assets for the Company’s commodity contracts are receivable from both counterparties, and the amounts recorded as liabilities for the Company’s commodity contracts are payable to
one
counterparty. The amounts recorded as liabilities for the Company’s swap contracts are payable to all
five
counterparties.
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
||||||||
Derivatives designated as hedging instruments:
|
|
Balance Sheet Location
|
|
December 31, 2016
|
|
Balance Sheet Location
|
|
December 31, 2016
|
||||
Commodity contracts
|
|
Other current assets
|
|
$
|
1.2
|
|
|
Accrued expenses
|
|
$
|
0.3
|
|
Commodity contracts
|
|
Other assets
|
|
0.1
|
|
|
Other noncurrent liabilities
|
|
0.1
|
|
||
Total derivatives designated as hedging instruments
(a)
|
|
|
|
1.3
|
|
|
|
|
0.4
|
|
||
|
|
|
|
|
|
|
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||
Swap contracts
|
|
Other current assets
|
|
$
|
—
|
|
|
Accrued expenses
|
|
$
|
25.8
|
|
Swap contracts
|
|
Other assets
|
|
—
|
|
|
Other noncurrent liabilities
|
|
—
|
|
||
Total derivatives not designated as hedging instruments
|
|
|
|
—
|
|
|
|
|
25.8
|
|
||
Total Derivatives
(b)
|
|
|
|
$
|
1.3
|
|
|
|
|
$
|
26.2
|
|
(a)
|
The Company has master netting agreements with its commodity hedge counterparties and accordingly has netted in its consolidated balance sheets approximately
$0.4 million
of its commodity contracts that are in a payable position against its contracts in receivable positions.
|
(b)
|
The Company has commodity hedge and foreign currency swap agreements with
two
and
five
counterparties, respectively. Amounts recorded as assets for the Company’s commodity contracts are receivable from both counterparties, and amounts recorded as liabilities for the Company’s swap contracts are payable to all
five
counterparties.
|
12.
|
Fair Value Measurements:
|
|
June 30,
2017 |
|
Level One
|
|
Level Two
|
|
Level Three
|
||||||||
Asset Class:
|
|
|
|
|
|
|
|
||||||||
Mutual fund investments in a non-qualified retirement plan
(a)
|
$
|
2.0
|
|
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives – natural gas instruments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total Assets
|
$
|
2.0
|
|
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liability Class:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities related to non-qualified retirement plan
|
$
|
(2.0
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives – natural gas instruments, net
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
||||
Derivatives – foreign currency swaps
|
(13.8
|
)
|
|
—
|
|
|
(13.8
|
)
|
|
—
|
|
||||
Total Liabilities
|
$
|
(16.3
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
(14.3
|
)
|
|
$
|
—
|
|
(a)
|
Includes mutual fund investments of approximately
25%
in common stock of large-cap U.S. companies,
15%
in common stock of small to mid-cap U.S. companies,
5%
in international companies,
10%
in bond funds,
25%
in short-term investments and
20%
in blended funds.
|
|
December 31,
2016 |
|
Level One
|
|
Level Two
|
|
Level Three
|
||||||||
Asset Class:
|
|
|
|
|
|
|
|
||||||||
Mutual fund investments in a non-qualified savings plan
(a)
|
$
|
1.8
|
|
|
$
|
1.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives – natural gas instruments
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
Trading securities
|
1.8
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
||||
Total Assets
|
$
|
4.5
|
|
|
$
|
1.8
|
|
|
$
|
2.7
|
|
|
$
|
—
|
|
Liability Class:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities related to non-qualified savings plan
|
$
|
(1.8
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives – foreign currency swaps
|
(25.8
|
)
|
|
—
|
|
|
(25.8
|
)
|
|
—
|
|
||||
Total Liabilities
|
$
|
(27.6
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(25.8
|
)
|
|
$
|
—
|
|
(a)
|
Includes mutual fund investments of approximately
25%
in the common stock of large-cap U.S. companies,
10%
in the common stock of small to mid-cap U.S. companies,
5%
in the common stock of international companies,
5%
in bond funds,
40%
in short-term investments and
15%
in blended funds.
|
13.
|
Earnings per Share:
|
|
Three months ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net (loss) earnings
|
$
|
(6.4
|
)
|
|
$
|
6.3
|
|
|
$
|
15.1
|
|
|
$
|
56.0
|
|
Less: net (loss) earnings allocated to participating securities
(a)
|
(0.1
|
)
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
(0.3
|
)
|
||||
Net earnings available to common shareholders
|
$
|
(6.5
|
)
|
|
$
|
6.2
|
|
|
$
|
14.9
|
|
|
$
|
55.7
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding, shares for basic earnings per share
|
33,823
|
|
|
33,784
|
|
|
33,813
|
|
|
33,766
|
|
||||
Weighted-average awards outstanding
(b)
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Shares for diluted earnings per share
|
33,823
|
|
|
33,787
|
|
|
33,813
|
|
|
33,769
|
|
||||
Net earnings per common share, basic
|
$
|
(0.19
|
)
|
|
$
|
0.18
|
|
|
$
|
0.44
|
|
|
$
|
1.65
|
|
Net earnings per common share, diluted
|
$
|
(0.19
|
)
|
|
$
|
0.18
|
|
|
$
|
0.44
|
|
|
$
|
1.65
|
|
(a)
|
Weighted participating securities include RSUs and PSUs that receive non-forfeitable dividends and consist of
169,000
and
163,000
weighted participating securities for the
three and six
months ended
June 30, 2017
, respectively, and
146,000
and
149,000
weighted participating securities for the
three and six
months ended
June 30, 2016
, respectively.
|
(b)
|
For the calculation of diluted earnings per share, the Company uses the more dilutive of either the treasury stock method or the two-class method to determine the weighted-average number of outstanding common shares. In addition, the Company had
728,000
and
609,000
weighted-average equity awards outstanding for the
three and six
months ended
June 30, 2017
, respectively, and
580,000
and
491,000
weighted-average equity awards outstanding for the
three and six
months ended
June 30, 2016
, respectively, which were anti-dilutive and therefore not included in the diluted earnings per share calculation.
|
14.
|
Subsequent Event:
|
•
|
The largest rock salt mine in the world in Goderich, Ontario, Canada;
|
•
|
The largest dedicated rock salt mine in the U.K. in Winsford, Cheshire;
|
•
|
A solar evaporation facility located in Ogden, Utah, which is both the largest SOP production site and the largest solar salt production site in the Western Hemisphere; and
|
•
|
Several facilities producing essential agricultural nutrients and specialty chemicals in Brazil.
|
•
|
Total sales
increased
35%
, or
$58.5 million
, primarily due to the acquisition of Produquímica and a modest increase in Plant Nutrition North America sales. This increase was partially offset by a decrease in Salt segment sales.
|
•
|
Operating earnings
decreased
61%
, or
$9.5 million
, due to lower Salt segment operating earnings, partially offset by an increase in Plant Nutrition North America operating earnings and the inclusion of Produquímica in our operating results.
|
•
|
Earnings before interest, taxes, depreciation and amortization (“EBITDA”)* adjusted for items management believes are not indicative of our ongoing operating performance (“Adjusted EBITDA”)*
decreased
2%
, or
$0.6 million
.
|
•
|
Diluted earnings per share
decreased
$0.37
.
|
•
|
Total sales
increased
20%
, or
$100.6 million
, primarily due to the acquisition of Produquímica. This increase was partially offset by a decrease in Salt segment sales.
|
•
|
Operating earnings
decreased
47%
, or
$42.4 million
, due to lower Salt segment operating earnings, partially offset by an increase in Plant Nutrition North America operating earnings and the inclusion of Produquímica in our operating results.
|
•
|
Adjusted EBITDA*
decreased
20%
, or
$25.4 million
.
|
•
|
Diluted earnings per share
decreased
73%
, or
$1.21
.
|
•
|
The total plant nutrition business, on a combined basis, contributed approximately $16 million to the increase in gross profit.
|
•
|
Gross profit for Plant Nutrition North America was favorably impacted by higher sales volumes and lower per-unit costs, which were partially offset by higher per-unit shipping and handling costs during the period.
|
•
|
A decrease in Salt gross profit partially offset the increase in total gross profit by approximately $12 million.
|
•
|
The decrease in Salt gross profit was primarily due to significantly higher per-unit costs and lower sales.
|
•
|
The Salt segment contributed approximately $50 million to the decrease in gross profit.
|
•
|
Salt gross profit decreased primarily due to lower sales and higher per-unit costs.
|
•
|
The total plant nutrition business, on a combined basis, partially offset the decline in gross profit by approximately $32 million.
|
•
|
Gross profit for Plant Nutrition North America was favorably impacted by higher sales volumes and lower per-unit costs, which were partially offset by lower average sales prices and higher per-unit shipping and handling costs during the period.
|
•
|
The increase in SG&A expense was primarily due to the inclusion of Produquímica in our operating results in 2017 and approximately $1 million of charges primarily in our Salt segment related to ongoing restructuring activities.
|
•
|
The increase was primarily due to our higher aggregate debt level driven by the acquisition of Produquímica.
|
•
|
The increase in other expense was primarily due to foreign exchange losses, which were partially offset by an increase in interest income. Additionally, the comparative 2016 period included $1.6 million of expenses incurred related to the refinancing of our term loans and revolving credit facility.
|
•
|
The
decrease
was primarily due to lower pre-tax income and a lower effective tax rate.
|
•
|
Our income tax provision in both periods differs from the U.S. statutory rate primarily due to U.S. statutory depletion, domestic manufacturing deductions, state income taxes, foreign income, mining and withholding taxes and interest expense recognition differences for tax and financial reporting purposes.
|
•
|
Our effective tax rate
increased
from
14%
in the
second
quarter of
2016
to
19%
in the
second
quarter of
2017
, reflecting refinements made in each respective period related to the expected full-year pretax profit and expected tax rate.
|
•
|
The increase in SG&A expense was primarily due to the inclusion of Produquímica in our operating results in 2017.
|
•
|
The increase was primarily due to our higher aggregate debt level driven by the acquisition of Produquímica, which was partially offset by lower interest rates due to the refinancing of our term loans and revolving credit facility in April 2016.
|
•
|
The increase in other expense was primarily due to foreign exchange losses, which were partially offset by an increase in interest income. Additionally, the comparative 2016 period included $1.6 million of expenses incurred related to the refinancing of our term loans and revolving credit facility.
|
•
|
The
decrease
was primarily due to lower pre-tax income and a lower effective tax rate.
|
•
|
Our income tax provision in both periods differs from the U.S. statutory rate primarily due to U.S. statutory depletion, domestic manufacturing deductions, state income taxes, foreign income, mining and withholding taxes and interest expense recognition differences for tax and financial reporting purposes.
|
•
|
Our effective tax rate
declined
from
27%
in the first
six
months of
2016
to
24%
in the first
six
months of
2017
, reflecting a reduction in certain tax valuation allowances associated with the acquired Produquímica business.
|
|
2Q 2017
|
|
2Q 2016
|
|
2017 YTD
|
|
2016 YTD
|
||||||||
Salt Sales (in millions)
|
$
|
109.0
|
|
|
$
|
119.1
|
|
|
$
|
383.8
|
|
|
$
|
411.2
|
|
Salt Operating Earnings (in millions)
|
$
|
10.7
|
|
|
$
|
23.3
|
|
|
$
|
56.1
|
|
|
$
|
106.0
|
|
Salt Sales Volumes (thousands of tons)
|
|
|
|
|
|
|
|
||||||||
Highway deicing
|
948
|
|
|
1,058
|
|
|
4,439
|
|
|
4,782
|
|
||||
Consumer and industrial
|
424
|
|
|
442
|
|
|
966
|
|
|
924
|
|
||||
Total tons sold
|
1,372
|
|
|
1,500
|
|
|
5,405
|
|
|
5,706
|
|
||||
Average Salt Sales Price (per ton)
|
|
|
|
|
|
|
|
||||||||
Highway deicing
|
$
|
49.95
|
|
|
$
|
53.02
|
|
|
$
|
54.12
|
|
|
$
|
58.08
|
|
Consumer and industrial
|
$
|
145.32
|
|
|
$
|
142.47
|
|
|
$
|
148.65
|
|
|
$
|
144.38
|
|
Combined
|
$
|
79.44
|
|
|
$
|
79.39
|
|
|
$
|
71.01
|
|
|
$
|
72.06
|
|
•
|
Salt sales
decreased
8%
, or
$10.1 million
, due to lower highway deicing average sales prices and lower highway and consumer and industrial sales volumes, which were partially offset by an increase in consumer and industrial average sales prices.
|
•
|
Salt average sales prices were essentially flat due to an increase in consumer and industrial products average sales prices offset by lower highway deicing average sales prices.
|
•
|
Highway deicing average sales prices
decreased
6%
, primarily as a result of lower North American highway deicing bid prices for the 2016-2017 winter season and product sales mix. Consumer and industrial average sales prices
increased
2%
due to price increases introduced last year as well as an improvement in product sales mix.
|
•
|
Salt sales volumes
decreased
9%
, or
128,000
tons, and contributed approximately
$10 million
to the decline in Salt segment sales. Highway deicing sales volumes decreased 10% primarily due to the carryover impact of two consecutive mild winters. Consumer and industrial sales volumes decreased 4%.
|
•
|
Salt operating earnings decreased 54%, or $12.6 million, due to higher per-unit production costs resulting from lower operating rates due to lower than expected demand and costs associated with the on-going implementation of continuous
|
•
|
In addition, unfavorable logistics costs contributed to the decline in Salt segment operating earnings.
|
•
|
Salt sales
decreased
7%
, or
$27.4 million
, due to lower highway deicing average sales prices and sales volumes, which were partially offset by an increase in consumer and industrial sales volumes and average sales prices.
|
•
|
Salt average sales price
decreased
1%
and contributed approximately
$6 million
to the decrease in Salt segment sales. The decrease in average sales price was due to a decrease in highway deicing average sales prices, partially offset by an increase in consumer and industrial products average sales prices.
|
•
|
Highway deicing average sales prices
decreased
7%
, primarily as a result of lower North American highway deicing bid prices for the 2016-2017 winter season. Consumer and industrial average sales prices
increased
3%
due to price increases introduced last year as well as an improvement in product sales mix.
|
•
|
Salt sales volumes
decreased
5%
, or
301,000
tons, and contributed approximately
$21 million
to the decline in Salt segment sales. Highway deicing sales volumes decreased 7% primarily due to the carryover impact of two consecutive mild winters. This increase was partially offset by a 5% volume improvement in the consumer and industrial business.
|
•
|
Salt operating earnings decreased 47%, or $49.9 million, primarily due to lower sales during the first six months of 2017 and higher per-unit costs due to sales of higher-cost 2016 inventory sold during the period. We experienced lower mine operating rates throughout 2016 and unplanned downtime at our Goderich mine in the fourth quarter of 2016, which increased 2017 per-unit costs.
|
•
|
In addition, unfavorable logistics costs contributed to the decline in Salt segment operating earnings.
|
|
2Q 2017
|
|
2Q 2016
|
|
2017 YTD
|
|
2016 YTD
|
||||||||
Plant Nutrition North America Sales (in millions)
|
$
|
50.5
|
|
|
$
|
47.8
|
|
|
$
|
99.7
|
|
|
$
|
98.9
|
|
Plant Nutrition North America Operating Earnings (in millions)
|
$
|
7.6
|
|
|
$
|
4.7
|
|
|
$
|
15.2
|
|
|
$
|
10.0
|
|
Plant Nutrition North America Sales Volumes (thousands of tons)
|
78
|
|
|
74
|
|
|
157
|
|
|
148
|
|
||||
Plant Nutrition North America Average Sales Price (per ton)
|
$
|
642
|
|
|
$
|
651
|
|
|
$
|
633
|
|
|
$
|
670
|
|
•
|
Plant Nutrition North America sales
increased
6%
, or
$2.7 million
.
|
•
|
Plant Nutrition North America sales volumes
increased
5%
, or
4,000
tons, and contributed approximately
$3 million
to the increase in Plant Nutrition North America sales. This increase was due to strengthening demand for specialty plant nutrients at modestly lower prices.
|
•
|
The
1%
decrease
in Plant Nutrition North America average sales price partially offset the increase in Plant Nutrition North America sales by approximately
$1 million
.
|
•
|
Plant Nutrition North America operating earnings increased 62%, or $2.9 million, primarily due to a 9% reduction in per-unit costs as lower SOP manufacturing costs more than offset a modest rise in SG&A expense related to increasing the innovation and commercialization capabilities of the plant nutrition business.
|
•
|
Unfavorable logistics costs partially offset the increase in Plant Nutrition North America operating earnings.
|
•
|
Plant Nutrition North America sales
increased
1%
, or
$0.8 million
.
|
•
|
Plant Nutrition North America sales volumes
increased
6%
, or
9,000
tons, and contributed approximately
$6 million
to the increase in Plant Nutrition North America sales. This increase was due to a modest improvement in North American SOP market fundamentals.
|
•
|
The
5%
decrease
in Plant Nutrition North America average sales price partially offset the increase in Plant Nutrition North America sales by approximately
$6 million
. The lower average selling prices resulted from the depressed agriculture market.
|
•
|
Plant Nutrition North America operating earnings increased 52%, or $5.2 million, primarily due to a 13% reduction in per-unit costs.
|
•
|
Unfavorable logistics costs partially offset the increase in Plant Nutrition North America operating earnings.
|
|
2Q 2017
|
|
2017 YTD
|
||||
Plant Nutrition South America Sales
|
$
|
66.1
|
|
|
$
|
127.4
|
|
Plant Nutrition South America Operating Earnings
|
$
|
0.8
|
|
|
$
|
2.6
|
|
Plant Nutrition South America Sales Volumes (thousands of tons)
|
|
|
|
||||
Agricultural productivity
|
79
|
|
|
139
|
|
||
Chemical solutions
|
72
|
|
|
144
|
|
||
Total tons sold
|
151
|
|
|
283
|
|
||
Average Plant Nutrition South America Sales Price (per ton)
|
|
|
|
||||
Agricultural productivity
|
$
|
519
|
|
|
$
|
553
|
|
Chemical solutions
|
$
|
350
|
|
|
$
|
352
|
|
Combined
|
$
|
439
|
|
|
$
|
451
|
|
•
|
Plant Nutrition South America sales were
$66.1 million
for the second quarter. Plant Nutrition South America’s operating results are impacted by seasonality. Sales volumes are usually higher in the third and fourth quarter and lower in the first and second quarters. See “—Seasonality” for more information.
|
•
|
Plant Nutrition South America average sales price was
$439
per ton.
|
•
|
Plant Nutrition South America sales were
$127.4 million
for the first six months of 2017. Plant Nutrition South America’s operating results are impacted by seasonality. Sales volumes are usually higher in the third and fourth quarter and lower in the first and second quarters. See “—Seasonality” for more information.
|
•
|
Plant Nutrition South America average sales price was
$451
per ton.
|
•
|
The annual bidding process for North American highway deicing contracts is underway, and because of mild winter weather in the U.S., we expect a contraction of bid volumes in our served markets when compared to the 2015-2016 bid season. We expect Salt sales volumes to range from 11.3 million to 11.6 million tons in 2017.
|
•
|
We expect Plant Nutrition North America sales volumes to range from 320,000 to 340,000 tons in 2017.
|
•
|
Our Plant Nutrition South America business has been negatively impacted by delayed and reduced purchasing by distribution customers, however sales of its higher-value products sold directly to farmers have remained strong. As a result, we expect Plant Nutrition South America sales volumes to range from 750,000 to 850,000 tons in 2017.
|
•
|
In July 2017, we initiated a restructuring plan to reduce ongoing costs and further streamline the organization. These initiatives are expected to result in a charge of approximately
$4 million
in the third quarter of 2017. We continue to actively pursue additional cost reductions in all areas of our business and may incur additional charges in 2017 as a result of these activities.
|
SIX MONTHS ENDED JUNE 30, 2017
|
SIX MONTHS ENDED JUNE 30, 2016
|
Operating Activities
:
|
|
» Net earnings were $15.1 million.
|
» Net earnings were $56.0 million.
|
» Non-cash depreciation and amortization expense was $56.4 million.
|
» Non-cash depreciation and amortization expense was $40.9 million.
|
» Working capital items were a source of operating cash flows of $69.4 million.
|
» Working capital items were a source of operating cash flows of $53.1 million.
|
Investing Activities
:
|
|
» Net cash flows used by investing activities included $55.6 million of capital expenditures.
|
» Net cash flows used by investing activities included $94.8 million of capital expenditures.
|
Financing Activities
:
|
|
» Net cash flows used by financing activities included the payment of dividends of $48.9 million.
» In addition, we had net payments on our debt of $69.9 million.
» We also paid $12.8 million for the final payment related to the Produquímica acquisition.
|
» Net cash flows used by financing activities included the payment of dividends of $47.1 million and payments of $5.0 million to refinance debt.
» In addition, we had net borrowings on our debt of $29.6 million and $0.7 million in proceeds received from stock option exercises.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net (loss) earnings
|
$
|
(6.4
|
)
|
|
$
|
6.3
|
|
|
$
|
15.1
|
|
|
$
|
56.0
|
|
Interest expense
|
12.3
|
|
|
5.6
|
|
|
26.0
|
|
|
11.4
|
|
||||
Income tax (benefit) expense
|
(1.5
|
)
|
|
1.0
|
|
|
4.8
|
|
|
21.0
|
|
||||
Depreciation, depletion and amortization
|
28.0
|
|
|
21.0
|
|
|
56.4
|
|
|
40.9
|
|
||||
EBITDA
|
32.4
|
|
|
33.9
|
|
|
102.3
|
|
|
129.3
|
|
||||
Adjustments to EBITDA:
|
|
|
|
|
|
|
|
|
|
||||||
Other expense, net
|
1.8
|
|
|
0.9
|
|
|
1.7
|
|
|
0.1
|
|
||||
Adjusted EBITDA
|
$
|
34.2
|
|
|
$
|
34.8
|
|
|
$
|
104.0
|
|
|
$
|
129.4
|
|
|
|
COMPASS MINERALS INTERNATIONAL, INC.
|
|
|
|
|
|
|
Date: August 8, 2017
|
By:
|
/s/ James D. Standen
|
|
|
|
James D. Standen
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
Exhibit
No.
|
|
Exhibit Description
|
10.1
|
|
Amended and Restated Employment Agreement, effective August 3, 2017, between Compass Minerals International, Inc. and Francis J. Malecha (incorporated herein by reference to Exhibit 10.1 to Compass Minerals International Inc.’s Current Report on Form 8-K filed on August 4, 2017).
|
10.2
|
|
Restrictive Covenant Agreement, effective August 3, 2017, between Compass Minerals International, Inc. and Francis J. Malecha (incorporated herein by reference to Exhibit 10.2 to Compass Minerals International Inc.’s Current Report on Form 8-K filed on August 4, 2017).
|
31.1*
|
|
Section 302 Certifications of Francis J. Malecha, President and Chief Executive Officer.
|
31.2*
|
|
Section 302 Certifications of James D. Standen, Chief Financial Officer.
|
32**
|
|
Certification Pursuant to 18 U.S.C. §1350 of Francis J. Malecha, President and Chief Executive Officer, and James D. Standen, Chief Financial Officer.
|
95*
|
|
Mine Safety Disclosures.
|
101**
|
|
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, formatted in Extensive Business Reporting Language (XBRL): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of comprehensive (loss) income, (iv) consolidated statement of stockholders’ equity, (v) consolidated statements of cash flows, and (vi) the notes to the consolidated financial statements.
|
*
|
Filed herewith
|
**
|
Furnished herewith
|
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